If you’re wondering why many Australian retail stocks have had a bad run in recent years, this chart goes someway to answering your question.

From Jo Masters, Senior Economist at ANZ Bank, it shows the contribution to year-on-year growth in Australian retail sales.

Notice something?

While sales volumes, excluding the impact of price movements, are doing OK without being great, prices, indicated in blue shading, have now gone backwards for two consecutive quarters.

Prices, compared to last year, are falling for retail goods.

As Masters explains, not only is this unusual, it shows the intense price pressures facing Australian retailers.

“In annual terms, retail volumes rose by 2.6% year-on-year while prices are 0.2% lower,” she says.

“It is very rare for retail prices to decline in annual terms, particularly for two quarters in a row, and this highlights just how poor pricing power is in the face of intense competitive pressures.”

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